Zanele Matlala

FERROCHROME producer Merafe Resources, which is in joint venture with Glencore, launched a secondary listing on the Australian Securities Exchange in June last year, raising the group’s global profile at a time when it’s facing significant headwinds. The company shares in many of the infrastructural pressures of South Africa’s troubled economy, the key one being interrupted electricity supply. As a response to this risk, Matlala throttled back production in 2023.

That’s all good and well, but the extent of the national emergency on services, to which you can add rail logistics, has forced Matlala into more serious considerations including a certain difficulty in crafting long-term business plans. As a result the company would “remain cautious” in its approach, Matlala said. Despite this state of affairs Merafe has not pulled the plug on capital expenditure entirely.

In September, Merafe and Glencore said they would extend an agreement to produce platinum group metals, a by-product in their chrome joint venture even though the short- to medium-term outlook for the precious metals is downbeat. This project will see the expansion of a processing plant on the eastern half of the Glencore-Merafe- controlled chrome properties. Merafe’s share of the R585m cost is R117m, reflecting its 20.5% stake in the joint venture.

As of end-June, the company had over R1.6bn on its balance sheet, so it has the liquidity for the project, although the sometimes lazy aspect of Merafe’s balance sheet has been a source of frustration for minority shareholders. They may reflect, however, Matlala’s characteristic caution which has served shareholders well in the past.